Legislative Update

Monday, April 20, 2015
April 20, 2015 Legislative Update

House Unveils Comprehensive Transportation Funding Reform

The House filed a long-term transportation reform proposal, House Bill 927 - Reestablish NC as the “Good Roads State,” which redefines how the state will collect and spend transportation revenue. The new spending plan will outline new infrastructure spending, an increase of approximately $1 billion per year, in specific sums towards contract resurfacing, state port modernization, city streets, bridge repairs and other transportation needs.

The bill, sponsored by Rep. John Torbett (R-Gastonia), includes provisions which:

  • Gas Tax: Decrease the state gas tax from 36 cents to 30 cents, implemented on July 1 through January 2017. In 2017, the gas tax would be set by a new formula based on state population growth and national energy inflation rates.
  • Highway Fund Revenues: Over four years, phase out the transfer of $255 million in gas tax collections and other highway fund revenue to the general fund.
  • Highway Use Tax: Increase the tax on car sales from 3 percent to 4 percent (January 2016).
  • Department of Motor Vehicles (DMV): Increase fees for permits, licenses, titles and registrations.
  • Auto Insurance: Implement a new 6.5 percent tax collected on automobile insurance premiums.
  • Trucks: Increase the fees for trucks and the fees charged by weight for property-hauling vehicles.
  • Car Rentals: Increase the tax on car rentals from 8 percent to 9 percent on short-term rentals, and from 3 percent to 4 percent on long-term rentals.

The Charlotte Chamber has and will continue to prioritize comprehensive transportation reform measures. At the onset, our chamber joined the statewide coalition led by the North Carolina Chamber of Commerce, and we look forward to continued dialogue with our delegation to advance this pivotal issue. Please refer to the summary in the April 20, 2015, public policy update for a review of our Transportation Infrastructure Summit held on April 17, 2015.

House Files Proposal to Implement Governor’s Bond Proposals

House budget leaders filed a bill last week that would, among other things, implement the governor’s proposed bonds for highways and infrastructure. House Bill 940-2015 - Governor’s Budget, authorizes a voter referendum for $3 billion in bonds to pay for road projects and government and campus building construction. The measure requests up to $1.5 billion in highway bonds and $1.5 billion in infrastructure bonds. Each bond would be subject to a statewide vote in October or November during municipal elections. Among the highlighted projects included within the proposed bonds are:

  • $200 million for port infrastructure improvements.
  • $200 million in community college system projects statewide.
  • $504 million for UNC System projects, including $60 million for a science building at UNC Charlotte, $114 million for a science facility at Western Carolina University, $99 million for a new engineering facility at North Carolina A&T State University, and $77 million for an engineering building at NC State University.
  • $15 million for infrastructure within the state court system.
  • $409 million toward construction of five sections of the Winston-Salem beltway.

The proposed bonds will need to pass both the North Carolina House and Senate before the referendum can be placed on voter ballots.

Unanimous House Votes to Repeal Map Act

The North Carolina House voted unanimously Thursday to repeal the state Map Act, which enables the North Carolina Department of Transportation (DOT) to reduce its right-of-way expenditures by blocking landowners from developing property it anticipates purchasing for future highway projects. The DOT uses the Map Act to draw corridor maps, which can sometimes handcuff property owners for decades, while neighbors are free to develop their land as they see fit and increase its profitability.

House Bill 183 - Repeal the Map Act now heads to the state Senate for consideration.

Bi-Partisan Group Files Economic Development Bill
Just in time for the North Carolina House’s bill filing deadline, a bi-partisan group of legislators filed a new economic development bill, House Bill 920 - Omnibus Economic Development Improvements, on Thursday. Last month, the House approved an economic development package, House Bill 117 - NC Competes Act, which is now parked in the Senate. HB 920 includes many of the same provisions that are in HB 117, but adds a number of new provisions, including: the historic preservation tax credit program, an expansion of the film grant program, and tax credits for cigarette exports, state port fees, motorsports, and research and development.

It is unclear whether HB 920 will be better received by the Senate, than HB 117. The Senate has also proposed its own economic development package, Senate Bill 526 - The Job Creation and Tax Relief Act of 2015. SB 526, which has not yet received a committee hearing, concentrates on cutting taxes and ensuring that more JDIG grants go to rural counties.

Bill Would Put All Uber, Lyft Regulation With the State

Cities have struggled for more than a year with how they should regulate cars and drivers of ride-share companies such as Uber and Lyft. New legislation proposed last week would take the issue entirely out of the cities’ hands and put all regulation with the state. Senate Bill 541 - Regulate Transportation Network Companies sponsored by Senator Bill Rabon (R-Brunswick), and its companion bill, House Bill 680, sponsored by Reps. Bill Brawley (R-Mecklenburg), John Bradford (R-Mecklenburg), Jason Saine (R-Lincoln) and Ed Hanes (D-Forsyth), would regulate transportation network companies through the North Carolina Division of Motor Vehicles. In the past, the General Assembly has passed legislation that prohibited North Carolina’s municipalities from regulating “digital dispatch” companies, but SB 541/HB 680 would prohibit municipalities from regulating companies, cars or drivers.

Among the legislation’s many provisions is a stipulation requiring all drivers to have their vehicles inspected annually. In addition, all companies would be required to perform criminal background checks. If any driver had a moving violation within a three year period, if they appeared in a national sex offender database or if they didn’t have a driver’s license, they would be denied a permit. SB 541 is expected to be taken up in the coming weeks.

House OKs Partisan Judicial Elections

In a 65-48 vote on Thursday, the state House gave preliminary approval to a plan to end nonpartisan elections for seats on the North Carolina Supreme Court and the North Carolina Court of Appeals. House Bill 8 - Restore Partisan Statewide Judicial Elections, sponsored by Rep. Bert Jones (R-Rockingham), purports that the aim of the legislation is to ensure transparency and give voters more information about candidates. House Democrats strongly disagreed. "Going to partisan elections is not the solution; we’re going to elect more judicial activists, both from the left and from the right,” said Rep. Grier Martin (D-Wake).

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Monday, April 6, 2015
April 6, 2015 Legislative Update

General Assembly Actions Pause for Spring Break

The North Carolina House and Senate will not be engaging in official legislative activity this week as they take a “spring break.” While neither recorded votes nor official committees will be held, both the House and Senate are expected to hold caucus meetings to discuss pending legislation. Specifically House members serving on appropriations committees will be working this week as they aim to finalize their state budget proposal, which is anticipated to pass the House by May 15. The House and Senate will officially return to work on April 13.

Update – Senate and House Leaders Plan Sales Tax Shifting Proposals

The Charlotte Chamber will continue to analyze all proposals and looks forward to working with the House, Senate and governor to find common ground and advance initiatives that will ensure Charlotte’s business community is not negatively impacted.

  • Senator Brown Proposes Sales Tax Redistribution

    As previously reported, Senate leaders are working on a proposal that would change the formula in which sales tax revenues are distributed to counties across the state. Senator Harry Brown (R-Jones/Onslow) filed Senate Bill 369-Sales Tax Fairness Act that would change the way revenues from local sales taxes are allocated. Under the current state formula, 75 percent of the revenues from the local sales tax are distributed to the county where the taxes are collected, with the remaining 25 percent distributed on a per capita basis. Senate Bill 369 would distribute all local sales tax revenues per capita, phased in over three years. The proposal also changes the local sales tax to a state sales tax, requiring distributions among counties and municipalities to be allocated per capita. Currently, local county commissioners have the option of distributing the local sales tax either per capita or based on property valuations.
  • Senator Rucho Files Compromise Sales Tax Redistribution Proposal

Senator Bob Rucho (R-Matthew) introduced a different sales tax distribution proposal last week, Senate Bill 608-Simple & Fair Formula for Sales Tax Distribution. Senator Rucho’s proposal would also distribute sales tax based on population, however, it would have a “hold harmless” provision to keep county sales tax funding at 2013-2014 levels.

  • House Files New Sales Tax Proposal

    In the House, Rep. Howard Hunter (D-Ahoskie) filed a bipartisan proposal along with Finance Chairmen Jason Saine (R-Lincoln) and Mitch Setzer (R-Catawba). House Bill 518, The County Sales Tax Flexibility Act, would allow all counties to raise local sales tax by a quarter-cent without a voter referendum. The bill is also supported by the North Carolina Association of County Commissioners.

House Debates Building Code Council Reforms

The House Regulatory Reform Committee passed House Bill 255-Building Code Regulatory Reform last week. The measure, sponsored by Rep. Mark Brody (R-Union) and Rep. Tricia Cotham (D-Mecklenburg), would make significant changes to the state building code and inspection process for residential construction aimed at remedying separate jurisdictional code interpretation and enforcement. Current law provides plan review for residential structures discretionary with many local inspections departments requiring the review. The proposal would eliminate mandatory plan reviews prior to construction for one-and two-family residential projects and increase the threshold in residential projects for which a building permit is required from $5,000 to $15,000. In addition, the bill would direct the department of insurance to post online all appeal decisions, interpretations and variations of the code issued by the building code council within three days and require fees collected from inspections be used solely to support activities of the inspections department.

HB255 was re-referred to the House Finance Committee, where it will have to pass before it will be voted on by the full House.

Employer Property Protection Proposals Filed

The House and Senate filed legal reform proposals protecting employers last week, Senate Bill 433/House Bill 405-The Property Protection Act. The proposals protect property owners (employers) against those who gain access to non-public areas and engage in activities that go beyond the permissions given by the property owners. The measure would create a $5,000-per-day penalty for violations, which are similar to the civil penalties under the Unfair and Deceptive Trade Practices Act. The goal of the bills is to help prevent corporate espionage, organized retail theft and other employment fraud activity within state businesses.

House Gives Nod to Biosimiliar Medications

The House passed last week House Bill 195-Allow Substitution of Biosimiliars, which permits pharmacists to substitute “biosimiliar interchangeables” for complex medications. Generic medications, which are chemical copies of name-brand drugs offered at cheaper prices, are common knowledge and already permitted within the marketplace. Biological drugs, however, are more complicated to replicate as their molecules are larger and are typically produced using living organisms. Rather than being exact copies, biosimiliars carry out the same functions, but are not chemically identical. The proposed legislation permits pharmacists to substitute a biosimiliar interchangeable with a doctor’s permission and requires pharmacists to notify doctors when a substitution is made.

House Bill 195 now moves to the Senate for consideration.

House Tweaks Governing ProceduresThe House amended their permanent rules last week, which govern the procedures.

  • Bill Filing Cap
    Allows legislators to introduce up to 15 public bills (in comparison to the previous 10-bill limit).
  • Bill Filing Deadline
    Extends the bill filing deadline to April 14.
  • Bills and Sponsorship
    Permits sponsors of House bills that get amended by the Senate to remove their names as sponsors.
  • Cellphone Usage

Allows legislators to use cellphones on the House floor for social media and/or emails; calls are still prohibited.

 

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Monday, March 30, 2015
March 30, 2015 Legislative Update

Flurry of Activity at the General Assembly With Senate Bill Filing Deadline

Last Thursday, March 26, was the bill filing deadline for the North Carolina Senate, which resulted in a flood of legislation. One hundred ninety-five Senate bills were filed on today’s deadline, bringing the tally to 711 bills for the Senate’s filing period this session. The North Carolina House of Representatives has an upcoming filing deadline of April 1 for local bills, April 8 for public bills and resolutions not dealing with appropriations or finance, and April 15 for bills that deal with appropriations and finance.

Update – Senate Leaders Plan Sales Tax Shifting Proposals

The Charlotte Chamber will continue to analyze all proposals and looks forward to working with the House, Senate and governor to find common ground and advance initiatives that will ensure Charlotte’s business community is not negatively impacted.

As previously reported, Senate leaders are working on a proposal that would change the formula in which sales tax revenues are distributed to counties across the state. Senator Harry Brown (R-Jones/Onslow) filed Senate Bill 369-Sales Tax Fairness Act that would change the way in which revenues from local sales are allocated. Under the current state formula, 75 percent of the revenues from the local sales tax are distributed to the county where the taxes are collected, with the remaining 25 percent distributed on a per capita basis. Senate Bill 369 would distribute all local sales tax revenues per capita, phased in over three years. The proposal also changes the local sales tax to a state sales tax, requiring distributions among counties and municipalities to be allocated per capita. Currently, local county commissioners have the option of distributing the local sales tax either per capita or based on property valuations.

The North Carolina General Assembly’s Fiscal Research Division released a report late last week illustrating the impact of the proposed bill:

Mecklenburg County: -$67.8 million (-32%)
Charlotte: -$2.2 million (-2%)
Cornelius: +$324,000 (+9%)
Davidson: +$5,500 (+.3%)
Huntersville: +$1.9 million (+34%)
Matthews: +$932,000 (+27%)
Mint Hill: +$1.34 million (+58%)
Pineville: -$263,000 (-18%)

Following the report, Senator Brown stated that the projections represent unintended consequences and he plans to make amendments to his package to ensure that cities and towns see revenue changes that largely mirror their counties.

“I think there will be very little, if any, impact to the cities” in the final legislation, he said. “This is a complicated major bill that’s going to take a lot of work.”

  • Senator Rucho Files Compromise Sales Tax Redistribution Proposal

While Senator Brown’s bill is debated and amended, Senator Rucho (R-Matthew) introduced a separate sales tax distribution proposal last week, Senate Bill 608-Simple & Fair Formula for Sales Tax Distribution. Senator Rucho’s proposal would also distribute sales tax based on population, however, it would have a “hold harmless” provision to keep county sales tax funding at 2013-2014 levels.

Senate Unveils New Tax “Reform” Package

Senate leaders filed a tax package, SB 526-Job Creation and Tax Relief Act of 2015, which expands the larger tax overhaul package that was passed in 2013. The plan amounts to $1 billion in additional tax cuts, including:

  • Personal Income Tax
    Lowers personal income tax rates to 5.625 percent in 2016 and 5.5 percent in 2017. The current rate is 5.75 percent.
  • Corporate Tax Rate
    Reduces the corporate income tax rate to 4.5 percent in 2016 and 4 percent in 2017, and eliminates the trigger requirements of state revenue laws for the reductions to take place.
  • Income Tax Option
    Provides an option to use a zero percent bracket on income taxes or choose to itemize deductions. The new zero percent bracket would apply to assessing no state income tax on the first $20,000 earned by married taxpayers filing jointly. Single taxpayers would pay no income tax on the first $10,000 of their income.
  • Single Sales Factor Appointment
    Shifts to the new corporate income taxing method, which calculates companies’ tax liability based entirely on sales versus payroll and property value. Projected to reduce corporate tax liability by $75 million.
  • Job Development Investment Grant Incentive Program (JDIG)
    Raises the cap on the JDIG program, however, caps Wake, Mecklenburg and Durham counties to receive no more than half of the incentives.

House and Senate Reach Compromise on Gas Tax Proposal

As previously reported, the Senate and House passed different versions of the transportation funding reform package, Senate Bill 20-IRC Update/Motor Fuel Tax Changes. Given the changes made to the Senate legislation in the House, a conference committee was formed where leaders from the House and Senate worked out differences and developed a new negotiated package. The outcome of the negotiations includes:

  • Fuel Tax Rate
    The current 37.5 cents per gallon will fall to 36 cents on March 31, 35 cents in January 2016 and 34 cents in July 2016.
    • The Senate originally proposed to cut the fuel tax rate to 35 cents on March 1 and retain the rate for the future year. The House originally proposed for a minimum rate of 36 cents beginning April 1 through 2015, and letting the rate fall below 30 cents in January 2016.
  • Gas Tax Formula
    Repeals the current rate formula that moves the fuel tax rate up or down every six months depending on wholesale fuel prices. Effective in January 2017, a new formula will adjust the tax rate based on changes in the state population and the national Consumer Price Index for energy costs.
    • The Senate originally proposed to recalibrate the current fuel-price formula, which would enable the rate to rise in future years.

  • DOT Staff
    Does not include general DOT layoffs, but eliminates 40 unfilled positions.
    • The Senate originally proposed to lay off 500 DOT workers, with the House not including any layoff provisions.

  • Education Income Tax Credit
    Includes a new income tax law provision to allow an income tax credit of up to $250 for teachers who purchase their own classroom supplies.

The new negotiated package now has to be passed by the House and Senate before moving to the governor’s desk. The House and Senate are scheduled to vote on the package Monday, March 30. 

House Plans New Bipartisan Economic Development Measure

During last week’s House Finance Committee hearing, leaders announced that they are drafting a new economic development bill with bipartisan support. Rep. Jason Saine (R-Lincoln), a senior finance committee chairman, announced that House Bill 89, which was introduced by Democrats, would be a starting point for another economic development proposal with bipartisan efforts. This new negotiation within the House comes after the passage of the House Republican package, House Bill 117, which has already passed the House. The revised bipartisan version currently features several tax credits that were not included in House Bill 117, including:

  • Historic Preservation Credit
  • Film Tax Credit Program
  • Construction & Low-Income Housing-Users of State-Owned Ports

Update – Senate Passes JDIG Funding

The Senate passed the bill proposed by Senate leadership to provide additional money to the JDIG program. Senate Bill 326-Increase JDIG Program Funding, sponsored by Senator Gunn (R-Alamance), would provide $5 million immediately to the fund for the governor to offer to companies as an incentive. Senator Gunn has said that his proposal is a short-term measure while the House and Senate debate JDIG and other incentives programs. The bill now moves to the House for consideration.

The long-term funding of JDIG is included in Senate Bill 338 and House Bill 117 which the House and Senate will continue to negotiate.

House Approves Historic Preservation Tax Credits

The House gave final approval last week to House Bill 152, New Historic Preservation Tax Credit, with a vote of 98-15. The package will offer tax credits for the restoration of historic projects, basing the amount of credits on the type of project, the cost of the project and the development tier where the project takes place, expiring on January 1, 2021.

In passing the measure, the House voted down three Republican-sponsored amendments to the bill that would have required local governments to split the cost of credits with the state, eliminate credits for non-income-producing projects and allow the credits only for projects in tier 1 or tier 2 counties. The bill now moves to the Senate for consideration.

Senate Moves Forward With Extension of Solar Tax Credits

Last week, the Senate Finance Committee passed a package that would extend the tax credit for large solar energy projects. Senate Bill 372-Renewable Energy Safe Harbor would extend by one year the tax credit for renewable energy investments for projects within the process of completion and substantially funded by private parties. As currently drafted, the proposal would provide that a project less than 65 megawatts would qualify and a developer would have to have 80 percent of it complete by the end of 2015. For a project greater than 65 megawatts, a developer would have to have 50 percent complete by the end of 2015. The credit is worth 35 percent of investments. The bill is expected to have a full Senate vote this week.

Senate Proposes New Regulatory Reform Package

The Senate filed last week an omnibus regulatory reform package, Senate Bill 453-Regulatory Reform Act of 2015,which includes a wide array of regulatory reform provisions. Of note, the environmental regulations impacted include:

  • Environmental Violations Reporting
    Exempts those whom voluntarily report environmental violations from civil penalties.
  • Environmental Reporting Requirements
    Repeals the requirement for the Department of Environment & Natural Resources to report on environmental permit processing times.
  • Electronics Recycling
    Eliminates reports on electronics recycling and implements a study of the electronics recycling program.
  • Contaminated Property & Liability Protection
    Repeals state law that does not allow a person who caused or contributed contamination to receive liability protection and under benefits under the Brownfields Act.
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Monday, March 23, 2015
March 23, 2015 Legislative Update

Senate Leaders Unveil New Economic Development Package

Senate Republican leaders unveiled a new incentives package last week, Senate Bill 338-Economic Development/Tax Modification, that would place restrictions on the state’s incentives programs and reduce the state’s corporate tax rate. Highlights include:

  • Corporate Income Tax: Reduces the state’s current corporate income tax rate of 5 percent to 4 percent in 2016 and 3 percent in 2017. Eliminates the current requirement of revenue targets before further reductions. Projected revenue impact is $500 million.
  • Single Sales Factor Apportionment: Shifts to the new corporate income taxing method, which calculates companies’ tax liability based entirely on sales versus payroll and property value. Projected to reduce corporate tax liability by $75 million.
  • Incentives & Restrictions: Would release Job Development Investment Grant (JDIG) money on a quarterly basis with the requirement that counties other than Wake, Mecklenburg and Durham receive more than half of future JDIG funds. Under the proposal, less money would be available to fund incentives in the top three counties and the grants would be worth a smaller percentage of the company's tax burden.
  • Incentives & Exceptions: Carves out exceptions to allow for larger incentive packages for “high-yield” projects that provide at least 2,500 jobs.

In addition, Senate leadership filed a bill that would provide additional money to the JDIG program. Senate Bill 326-Increase JDIG Program Funding, sponsored by Senator Gunn (R-Alamance), would provide $5 million immediately to the fund for the governor to offer to companies as an incentive. Senator Gunn has said that his proposal is a short-term measure while the House and Senate debate JDIG and other incentives programs.

Governor, House & Senate Spar Over Incentives

The Senate’s new incentives proposal comes in direct conflict with the economic development package backed by the House and Governor McCrory. The package pushed by House leaders, House Bill 117-NC Competes Act has already passed the House. Highlights include:

  • Job Development Investment Grant Program (JDIG)
    Doubles the JDIG cap from $22.5 million for the current two-year period to $45 million. In addition the name of the program would be renamed to Job Growth Reimbursement Opportunities.
  • Single Sales Factor Apportionment
    Amends the taxing formula to apportion corporate business income on the sole basis of the corporation’s total sales that occur within the state for companies investing more than $1 billion.
  • Jet Fuel Taxes
    Extends the jet fuel tax cap until January 2020. The law capping jet fuel taxes at $2.5 million a year is set to expire this year. Without legislative action, American Airlines has said its fuel bill could rise by $15.5 million next year, totaling upward of $18 million. American Airlines’ hub in Charlotte is a critical component for economic development in the state.

Following the unveiling of the Senate’s proposal, the governor responded with criticism, saying that it “frankly disappoints me,” “it breaks the bank” and “divides North Carolina.” The governor stated that the single sales factor coupled with the corporate rate cut would leave a budget deficit. Senate President Pro Tem Phil Berger (R-Rockingham) responded to the governor’s statement, criticizing the governor’s budget proposal for tax breaks including jet fuel and NASCAR, “I’m trying to comprehend how the governor wants to spend $1 billion on new incentives, but considers it ‘breaking the bank’ to allow North Carolina taxpayers and job creators to keep about $500 million of their own money,” said Berger.

Governor Wins Separation of Powers Lawsuit

Last week a three-judge panel ruled in favor of Governor McCrory in his separation of powers lawsuits against the Legislature for making appointments to boards and commissions. The court ruling found that lawmakers unconstitutionally stripped the governor of powers when they created independent panels to manage coal ash cleanup and oversee mining and gas exploration. The court found that the governor (executive branch), not the Legislature, has the power to appoint members of boards such as the Coal Ash Commission that are “administrative or executive in character.” Following the ruling, attorneys representing the General Assembly and Attorney General Roy Cooper formally appealed to the North Carolina Supreme Court.

House Proposal to Permit Electricity Third-Party Sales

Rep. Szoka (R-Cumberland) unveiled a proposal last week legalizing third-party sales of electricity, which would allow electricity customers to enter into power generation and purchase agreements with non-utilities. House Bill 245-Energy Freedom Act would permit customers, including governments to buy electricity directly from renewable energy companies, which would own and maintain power systems. The proposal provides that the operator of the energy-generating facility would not be considered a “public utility,” and as such, would not be subject to the oversight of the Utilities Commission regulations as long as the facility does not supply more than 125 percent of the average annual energy consumption of the customer.

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Monday, March 16, 2015
March 16, 2015 Legislative Update

Budget Plans at Forefront of Legislative Activity

Following the Governor McCrory’s unveiling of his budget blueprint for the state’s 2015-2016 fiscal year spending plan, legislators are now focused on drafting their own spending plans. Last week, the Governor’s Budget Director, Lee Roberts presented the Governor’s budget plan to lawmakers and faced a wide array of questions and concerns from legislators. The majority of questions centered around pay proposals for state employees and capping the use of state money for university funding to $1 million at each campus.

The Governor’s $21.5 billion budget blueprint includes:

  • General State Spending: Slightly less than $1 billion increase over the current year’s state spending. Of the new spending, 76% will be spending on education and Medicaid.
  • Medicaid: $1.1 million in expansion funds into developing an “accountable care organization” model of Medicaid that would rely on in-state doctors, hospitals and other health care providers.
  • Education: Salary increases for state-funded teachers and administrators per salary scale and provides for enrollment growth.
  • State Employees: No across-the board pay raise for state employees, raises for “hard-to-fill and hard-to-retain” positions. Institutes a performance-management system for state employees.
  • Economic Development: $99 million into “NC Competes” plan, of which is an expansion of incentives used to lure large manufacturers; $10 million into film grant program; and extension of state’s historic preservation tax credit.
  • Community Colleges: Tuition increase by $4 a credit hour for both in-state and out-of-state students.
  • Transportation: Requests a $1.2 to $1.4 billion transportation bond and privatizes the state motor fleet.
  • Military & Veteran Affairs: Creates a new state agency, Department of Military and Veterans Affairs.
  • UNC: 2% spending cut. Limits the amount of state money the University of North Carolina system schools can spend on fundraising to $1 million.
  • Courts: Increases state court spending by $6 million, with $10 million additionally in 2016-17.

Governor’s Budget Proposal

Governor’s Budget Proposal Presentation

It is now up to legislative leaders to build the state’s spending plan. The budget will take effect for the fiscal year that begins July 1 and includes a forecast of 2016-17 spending. The House will first craft its own budget proposal, with the Senate developing its spending plan after that. The two versions will have to be compromised and passed by both chambers before presented to the Governor.

Gas Tax Proposal Heads to Conference Committee

As previously reported, the Senate and House passed different versions of the transportation funding reform package, Senate Bill 20-IRC Update/Motor Fuel Tax Changes. The proposal would cut the state’s gas tax and add a new minimum rate that would keep it from decreasing. The gas tax would be reduced from the current 37.5 cents per gallon to 35 cents in the Senate proposal and to 36 cents in the House proposal, which would be the new minimum rates. Another difference between the House and Senate deals with mandatory Department of Transportation staff cuts, with the Senate mandating cuts and the House not including such a mandate. Given the changes made in the House, a conference committee has been formed where leaders in the House and Senate will work out differences and develop a negotiated package that will have to pass both the House and Senate. The conference committee is comprised of:

House


Senate

Related to the larger transportation funding reform talks, Rep. Charles Jeter (R-Huntersville) unveiled a proposal last week that would replace the state’s gas tax with vehicle registration fees.
House Bill 203-Phaseout of Fuel Tax would call for an annual fee of $201 for drivers, which was determined by dividing the amount raised by the current tax with the number of vehicles registered. Rep Jeter has said that revenue for transportation would rise as more cars are registered. Rep John Torbett (R-Gastonia) who Chairs two House Transportation committees has indicated he will be introducing additional proposals that would reconfigure fuel taxes and registration fees.

Senate Leaders Plan Sales Tax Shifting Proposal

Senate leaders are working on a plan that would shift millions in sales tax revenue from urban and coastal counties  to rural areas across the state. Senator Harry Brown (R-Jacksonville) has indicated that he will be filing legislation that would change how the state distributes a portion of the sales tax collected from purchases of clothing, building materials and other goods. Current law provides a formula based on where the sale occurs as to where the tax collections are distributed. The Senate’s plan would likely change the formula, emphasizing instead a distribution of the sales tax based on where people live and population.  According to projections by legislative staff, under a per-capita plan, rural counties such as Greene, Caswell and Jones, would see sales tax revenue more than double. On the flip side, urban counties would see a decrease such as Mecklenburg County and its towns and cities losing $35 million, a 16% decrease and Wake County and its town losing $18 million, a 13% decrease.

Senate legislation could be filed as early as this week.

House Proposes Changes to Health Care Certificates of Need

Last week the House introduced bi-partisan legislation that would remove several medical facilities from needing a certificate of need (CON) to start or expand operations. Current law requires a CON before a health care system or provider can build a medical facility, buy equipment or offer a medical procedure. House Bill 200-Amend Certificate of Need Laws would exempt diagnostic centers, ambulatory surgical centers, gastrointestinal endoscopy rooms and psychiatric hospitals from CON requirements.

Constitutional Amendment to Implement 4-Year Legislative Terms

A bill filed in the House would place a constitutional amendment on the November 2016 ballot for General Assembly members to serve four-year terms instead of two years. If the constitutional amendment is passed, the 4-year terms would begin with legislative members elected in 2020. The proposal also would ask voters on the 2016 ballot to decide whether to limit House speakers and Senate president pro tems to two consecutive regulator sessions of the General Assembly.

Senate Proposes Elimination of Personal Education Plans

Senate leaders filed a bill last week that would eliminate the current state requirement for Personal Education Plans for student. Senate Bill 272-Eliminate Personal Education Requirements would still require teachers to identify students at risk of academic failure but would not require teachers to prepare a detailed report on the student’s needs and the teacher’s proposed plan to meet those needs. Parents would still be able to request and receive a Personal Education Plan. Proponents of the bill argue that teachers have adopted better diagnostic and planning tools that enable them to tailor instruction to students’ needs. Opponents argue that the measure goes too far and will further exacerbate the issue of failing students who face poverty.

 

 

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